Oncor Electric enters $2 billion sustainability-linked revolver

By Marisa Wong

Los Angeles, Nov. 9 – Oncor Electric Delivery Co. LLC entered into an up to $2 billion sustainability-linked revolving credit agreement on Tuesday with JPMorgan Chase Bank, NA as administrative agent and swingline lender, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement contains an accordion feature allowing Oncor to request an increase of up to $400 million, in $100 million increments, provided certain conditions are met.

The revolver has a five-year term expiring on Nov. 9, 2026 and has two one-year extension options.

Loans bear interest at adjusted Libor plus an applicable margin of between 87.5 basis points and 150 bps, depending on credit ratings assigned to Oncor’s debt. Based on current ratings, Libor-based borrowings will bear interest at Libor plus 100 bps.

The credit agreement includes Libor replacement provisions.

The company must also pay a commitment fee of 7.5 bps to 22.5 bps, depending on ratings. Based on current ratings, the fee is 10 bps.

The credit agreement includes sustainability-linked pricing metrics related to specific environmental and employee health and safety sustainability objectives. The applicable margin and commitment fee may be increased, decreased or have no change depending on Oncor’s annual performance on two sustainability-linked pricing metrics. The maximum pricing adjustment in any given year is plus or minus 1 bp on the commitment fee and plus or minus 5 bps on the applicable margin.

In addition, the credit agreement requires that Oncor maintain a maximum consolidated senior debt to capitalization ratio of 0.65 to 1.00.

JPMorgan, Citibank NA and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners with Citibank and Wells Fargo Bank, NA as syndication agents.

Citibank and Wells Fargo Securities are co-sustainability structuring agents.

Barclays Bank plc, Mizuho Bank, Ltd., MUFG Union Bank, NA, PNC Bank, NA, Royal Bank of Canada, Sumitomo Mitsui Banking Corp., TD Securities (USA) LLC and U.S. Bank, NA are documentation agents.

Oncor intends to use the borrowings for working capital and other general corporate purposes.

In connection with entry into the new credit agreement, Oncor terminated its revolving credit agreement dated Nov. 17, 2017, which provided for an unsecured revolving credit facility totaling $2 billion that would have expired in November 2023.

Oncor is an electric utility based in Dallas.

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